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Transcript of Telecommunications in 2015 - It’s a brand new game Rob Van Den Dam 20 Oct. 2011
© 2011 IBM Corporation
IBM Institute for Business Value
Telecommunications in 2015
It‟s a brand new game
Rob van den Dam Global Telecommunications Sector Leader IBV
© 2011 IBM Corporation
IBM Institute for Business Value
2
Agenda
It is a brand new game
2
Smarter consumers, industries, CSPs
Four industry scenarios for CSPs
Introduction
© 2011 IBM Corporation
IBM Institute for Business Value
3
Telecommunications Solutions Lab (TSL)
Telecommunications Research Lab
TSL China &
Telecom Research Lab (Beijing)
TSL North America (Austin, Texas)
Japan (Tokyo
Satellite TSL)
TSL Israel &
Telecom Research Lab
(Haifa Satellite TSL)
Telecom Research Lab
(New Delhi)
TSL LATAM (Sao Paulo,
Brazil Satellite TSL)
TSL Europe (La Gaude &
Montpellier, France)
TSL Russia (Moscow Satellite TSL)
South Africa (Johannesburg, Satellite TSL)
ASEAN (Kuala Lumpur
Satellite TSL)
TSL India (Bangalore Satellite TSL)
Telecommunications is IBM‟s #1 research focus
Worldclass Partner
Ecosystem
Mobile Web Services
Centers of Excellence
Institute for Business
Value
Telecom Research
Labs
© 2011 IBM Corporation
IBM Institute for Business Value
4
The IBM Institute for Business Value creates fact based
thought leadership that help clients realize business value
Future
Agendas
Value Realization
Studies
3 to 10 year industry outlook
with action oriented next steps
In-depth assessment of today‟s
critical issues, opportunities, etc
CXO
Surveys
Chief Officiers studies – CEO,
CIO, CMO, CFO, CHRO, etc.
© 2011 IBM Corporation
IBM Institute for Business Value
5
Primary research includes Face-to-Face interviews with Executives from the
Telecommunications industry and Consumer Surveys
Customer Spending
priorities for 2011 –
2013
Customers’ Adoption of,
Experience with, comms
products and services
Customer Sources of
Information for communi-
cation products/ services
Customers’ Attitudes
towards CSPs
Customer Advocacy
and Antagonism
Adjacent Market
Opportunities
Most recent Consumer Survey mid 2011 in 24 countries
© 2011 IBM Corporation
IBM Institute for Business Value
Communications Service Providers (CSPs) are experiencing
significant change as the industry playing field transforms
6
It is a brand new game
Changes in the global hierarchy
Shifts in the way consumers communicate
Increasing power of the consumer
© 2011 IBM Corporation
IBM Institute for Business Value
7
The global hierarchy is changing
Changes in the global hierarchy
Source: ITU statistics database; Global Wireless Matrix Q211, Merrill Lynch, IBM Institute for Business Value (IBV)
Total:
719 million
2000
Total:
5.4 billion
2010
Total:
2.2 billion
2005
USA; 208
China;
375 India; 75
Russia; 126
Japan; 90
Brasil; 86
Italy; 71
Germany; 79
France; 46
UK; 68
Top 10
Mobile markets
worldwide
(M subs)
USA; 297
China;
833
India;
688
Russia;
217
Japan; 116
Brasil;195
Italy; 90
Germany;107
Mexico;
88 Nigeria;84
Mobile Cellular Subscriptions
© 2011 IBM Corporation
IBM Institute for Business Value
The communications industry is increasingly being driven by emerging
countries
Source: Global Wireless Matrix Q211, Merrill Lynch, IBM; Institute for Business Value (IBV)
1. Mobile Revenue YoY growth 1Q11
– Western Europe: - 2.5%
– Japan: - 0.6%
– North America: + 6.4%
– Emerging Asia: + 11.6%
– Latin America: + 10.9% – Brazil: + 10.9%
– Colombia: + 12.7%
– Argentina: + 19.6%
2. The emergence of new GIANTS:
Changes in the global hierarchy
0%
20%
40%
60%
80%
100%
120%
140%
160%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
Colombia
Brazil
Argentina
Mexico
US
Canada
100.2%
June 2011
The Americas
8
© 2011 IBM Corporation
IBM Institute for Business Value
2%
-8%
-9%
-10%
-12%
-17%
-17%
-19%
-20%
-21%
-26%
-37%
Utilities
Mobile Telepony
Transportation
Food & drinks
Mobile broadband
Pay television
Fixed Telephony
Clothing
Electrical
appliances
Sports
Holiday/vacation
Going out
Mobile Telephony
Mobile Broadband
Transportation
Pay television
Utilities
Elect. Appliances
Fixed Telephony
Holidays
Food & drinks
Clothing
Going out
Sports
29%
27%
27%
25%
20%
14%
13%
12%
11%
8%
1%
-2%
Holiday/vacation
Food & drinks
Clothing
Going out
Mobile Telephony
Mobile Broadband
Transportation
Pay television
Utilities
Electrical
appliances
Sports
Fixed Telephony
Mobile Telephony
Mobile Broadband
Transportation
Pay television
Utilities
Elect. Appliances
Fixed Teleph.
Source: 2011 IBM Global Telecom Consumer Survey, Global N= 12848
Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?
Consumer Spending Changes 2011- 2014
Net Increase/ Decrease Net Increase/ Decrease
In the emerging markets consumer sentiment is generally
higher than in mature ones
Changes in the global hierarchy
Holidays
Food & drinks
Clothing
Going out
Sports
9
© 2011 IBM Corporation
IBM Institute for Business Value
20%
14%
12%
Mobile telephony
Mobile broadband
Pay television
Fixed telephony
Source: 2011 IBM Global Telecom Consumer Survey, Global N= 12848
Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?
22%
10%
9%
9%
Mobile telephony
Fixed telephony
Mobile
broadband
Pay television
-4%
-6%
-16%
-18%
Mobile
telephony
Mobile
broadband
Fixed
telephony
Pay television
-8%
-12%
-17%
-17%
Mobile
Telephony
Mobile
broadband
Pay
television
Fixed
telephony
Mexico
Brazil
USA
Canada
For spending on communication services, CSPs in emerging
countries face better times than those in mature markets
Changes in the global hierarchy
Fixed Telephony
Fixed Telephony
Fixed Telephony
Fixed Telephony
Mobile Telephony
Mobile Telephony
Mobile Telephony
Mobile Telephony
Mobile Broadband Mobile Broadband
Mobile Broadband
Mobile Broadband
Pay television
Pay television
Pay television
Pay television
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
Communications
spending
10
© 2011 IBM Corporation
IBM Institute for Business Value
People are increasingly communicating over-the-top: email, IM, Chat,
Internet Video streaming, Social Networks, VoIP
Source: 2011 IBM Global Telecom Consumer Survey, Global N= 12848; S06 How often do you use the following communications services?
Mobile Telephony
Email/IM/Chat
Social Networking
VoIP
Mobile Telephony
Social Networking
Video Streaming
VoIP
Video Streaming
Fixed Voice
80%
85%
38%
64%
72%
24%
75%
82%
59%
53%
33%
69%
Email/IM/Chat
Fixed Voice
Daily
Usage Daily
Usage
ABOVE 25s
Shifts in the way consumers communicate
Mobile Telephony
Email/IM/Chat
Social Networking
VoIP
Mobile Telephony
Social Networking
Video Streaming
VoIP
Video Streaming
Fixed Voice
78%
92%
61%
74%
49%
29%
79%
84%
76%
54%
20%
59%
Email/IM/Chat
Fixed Voice UNDER 25s
Brazil Mexico
11
© 2011 IBM Corporation
IBM Institute for Business Value
The trend is towards many-to-many communications, increasingly taken
place over the mobile, augmented with videos, photos & other content
1:1/1:N
Open and Free
Gated Communities Shared Social Space
Co
mm
un
ica
tio
n P
att
ern
Open
Internet Communication Environment
Traditional
Communications
Provider
Controlled
Fixed
Voice
SMS Mobile
Voice
Mobile Social
Networking / Telco
Walled Gardens
Shift
Many to Many
Mobile
Social
Networking
is the fastest
growing Mobile Content
category
USA +56%
Dec ‘09
Dec ‘10
The
AppStore
Shifts in the way consumers communicate
Source: IBV report: “The changing face of communications”. May 2010 12
© 2011 IBM Corporation
IBM Institute for Business Value
13
In Colombia, Social Networking is ranked as top category by share of
minutes with one-third of web time spent on social networking sites…
Shifts in the way consumers communicate
IM Usage in Latin America
is the highest in the world
71%
48%
84%
90%
88%
89%
WW
Asia Pacific
Europe
North-America
Latin America
Colombia
53%
29%
67%
75%
66%
80%
WW
Asia Pacific
Europe
North-America
Latin America
Colombia
35%
19%
41%
29%
68%
65%
WW
Asia Pacific
Europe
North-America
Latin America
Colombia
5,4
11,8
10,6
10,0
9,3
8,7
8,4
8,4
WW
Israel
Russia
Argentina
Turkey
Chile
Philippines
Colombia
Social Network sites Reach (Dec 2010)
Photo Sites Reach (Dec 2010)
Instant Messengers Reach (Dec 2010)
Monthly hours spent on
Social Networks (June 11)
With 89.5% reach, Colombia ranked as 5th most highly penetrated Facebook market
Colombians lead Latin America region in Online Dating
Source: Comscore: A rise of Social Networking in latin America, Sept 2011, Comscore: Digital Year in review: Latin America. March 2011
COLOMBIA
© 2011 IBM Corporation
IBM Institute for Business Value
…and many activities are moving to the mobile
Download or listen to music
Upload or download photos and / or videos
Download or watch videos/television/ movies
Check e-mail
Use messenger
Go to personal page (Facebook, Twitter,
etc.) Use online services your bank
Online shopping
Consult / seek information on vehicular traffic
Which of the
following
activities you
usually do
with the
phone?
Take photos or videos
Location Fixed
Internet Mobile Internet
At home 56% 74%
At work place 32% 35%
On the street 6% 18%
Internet café 37% 5%
At friend 3% 4%
At college 12% 10%
Mobile
Internet
Fixed
Internet
Source: CINTEL, InteracTIC: Panorama mercado del sector TIC en Colombia, 2010
© 2011 IBM Corporation
IBM Institute for Business Value
OTT Comms providers (e.g.
Google, Facebook, Microsoft)
Cable/satellite providers
Over-the-top aggregator
Mobile Device Manufacturers
IT application
WiMAX operators
NEPs
Entrants from new industries (e.g. Banking)
Consumer Electronics
Electric utility providers
76%
34%
29%
24%
16%
16%
9%
5%
3
26%
2009 IBM Institute for Business Value Telecom Industry Executive Survey N=61
Shifts in the way consumers communicate
76% of CSP‟s identify OTT comms providers as their greatest competitive threat
Industry transformation is increasingly evoked by new market entrants
competing with traditional telecom providers over the open Internet
Acquisition Skype “Together we will create the future
of real-time communications”
Buys Motorola Mobility ($12.5bn)
Google MVNO launches in Spain
„Next-gen” Messaging System “It’s not email, it’s everything”
15
© 2011 IBM Corporation
IBM Institute for Business Value
The new consumer reality has created an impulse economy,
characterised by immediacy, frivolity, and transience
16
NO TIME! ALWAYS ON
TRANSPARENT I AM
CONNECTED
I AM LOYAL
TO ME!
FREE I HAVE NO
LIMITS
http://www.flickr.com/photos/trashd/1102373625
Increasing power of the consumer
© 2011 IBM Corporation
IBM Institute for Business Value
17
Internet Search, Friends/Family, and Social Media have
become the preferred sources of information
70%
64%
51%
45%
31%
22%
19%
17%
0% 20% 40% 60% 80%
Internet Search
Recommendations/ advice
Social Media
Websites communication providers
Traditional advertising
Emails/ promotional offers
Retail stores
Shopping portals/ auctions
Q19 What are your preferred sources of information when
you are looking for communications products and services?
Source: 2011 IBM Global Telecom Consumer Survey
76%
65%
53%
35%
30%
29%
17%
10%
70%
62%
48%
37%
43%
18%
14%
17%
0% 20% 40% 60% 80%
Brazil
Mexico Emerging
Countries
Increasing power of the consumer
© 2011 IBM Corporation
IBM Institute for Business Value
As consumers encounter new products, services and experiences on
virtually a daily basis, they fell less loyalty towards specific brands
18
Increasing power of the consumer
18% 22% 60%
Global (24 countries)
average of advocacy levels
in Telecommunications
industry
Advocates Antagonists Apathetics
Brazil US UK Germany Canada Italy France Mexico
Retail
Telecom
52% 51% 39% 34% 33% 32% 25% 26%
24% 17% 20% 20% 16% 13% 17% 21%
Comparison of advocacy levels in Retail and Telecommunications industry
Source: 2011 IBM Global Telecom Consumer Survey & 2010 IBM Global Retails Survey
Telecommunications
© 2011 IBM Corporation
IBM Institute for Business Value
19
Vast majority of the CSP CEOs therefore sense the new environment
as more volatile, complex, structurally different and uncertain
More volatile Deeper/faster cycles, more risk
More uncertain Less predictable
More complex Multi-faceted, interconnected
Structurally different Sustained change
Source: Q7 To what extent is the new economic environment different? Volatile n=1514; Uncertain n=1521; Complex n=1522 ; Structurally different
n=1523; Telco n=73
The New Economic Environment
19% 13 68%
23% 12 65%
29% 25% 46%
28% 35% 36%
Not at all/to a limited extent To a large/very large extent To some extent
Increasing power of the consumer
Shifts in the way consumers
communicate
Changes in the global hierarchy
© 2011 IBM Corporation
IBM Institute for Business Value
20
The telecom industry has undergone
significiant structural changes over the last
decade
How will it evolve over the coming years?
© 2011 IBM Corporation
IBM Institute for Business Value
Giving the ongoing uncertainties, IBM undertook scenario envisioning,
that enables the industry to assess alternative contrasting futures
21
What are the trends: - Certainties (high degree of consensus)
- Uncertainties (multiple outcomes)
Future
Scenario C
Scenario D
Scenario B
Scenario A
Present
Major economic, competitive
and technological events that
trigger a particular scenario
Critical Success Attributes:
- Scenario-specific
- Cross-scenario
Revenue and Profitability
outlook for each scenario
2008 Survivor
Consolidation
Market
Shakeout
Clash of Giants Generative
Bazaar
© 2011 IBM Corporation
IBM Institute for Business Value
IBM analyzed the forces shaping the future of the telecommunications
industry into 2015…
22
INDUSTRY
STRUCTURE AND
REGULATION
USAGE/
SERVICES
BUSINESS MODEL
ACCESS FORCES SHAPING
FUTURE OF
TELECOM
usage
services
PSTN decline accelerates
VOIP (incl. mobile VOIP) grow
Ubiquitous and seamless access
High digital content consumption
Communication remains fragmented
Broadband pervasive as TV
Mobile broadband favors LTE
Ultra low-cost devices grow
One in three devices is smartphone, MID, or Netbook
Voice monetized as a feature of connectivity
Green Telecom revenues
3rd – party revenues
Cost structures changes
New infrastructure competition from government, municipality
Net Neutrality remains
Mobile and fixed termination converge
Pure plays disappear
© 2011 IBM Corporation
IBM Institute for Business Value
….and potentially high-impact variables (13) that can have 2, 3 or 4
alternative outcomes……
23
OTT vs. Network optimized content
Silo vs. unified communications
Demand for Voice communications
New Verticals
Addressable Market/
Growth Areas Industry /
Integration Model
Premium /Enriched
Connectivity
Vertical vs. Horizontal Integration
Network sharing vs. Outsourcing
Open versus closed devices
User vs. 3rd Party / ad funded
Regulatory Uncertainty
Ultra-fast Broadband Availability
Dominant Industry / integration model
Concentrated/ Vertical
Fragmented/ Horizontal
Addressable
market
Declining/
Stagnant
Expanding
Telco 2015 SCENARIOS
SCENARIO 1
SCENARIO 3
SCENARIO 2
SCENARIO 4
13 high-impact uncertainties that can
have 2, 3 or 4 alternative outcomes
Machine-to-machine (M2M) communications
Service Pricing Model
© 2011 IBM Corporation
IBM Institute for Business Value
…and developed most likely scenarios, within the sphere of possible
futures, for the telecommunications industry in 2015
24
Telco 2015 SCENARIOS
Dominant Industry / integration model
Addressable market
• Reduce Spending
Consumers
• ARPU Erosion
• Investor Loss of
Confidence
• Cash Crisis
Concentrated / Vertical
Declining / Stagnant SURVIVAL
CONSOLIDATION
• Disaggregation of
Carrier Assets
• Involvement Govern-
ment, Municipalities
• Fragmentation
• Driven by Brands
Fragmented / Horizontal
MARKET
SHAKEOUT
Expanding CLASH OF
GIANTS
• Carrier collaboration
and alliances
• End-to-end Vertical
Market solutions
• Mega Carriers
• Emerging Carriers in
Mature markets
GENERATIVE
BAZAR
© 2011 IBM Corporation
IBM Institute for Business Value
The Generative Bazaar is characterized by pervasive and open
intelligent access for any person, object and device
25
Stimulate a
range of new and
exciting next gen Services
by OPEN INNOVATION
such as telemedicine and
immersive learning
applications.
Two-sided Business
Model Deploy
ultra-fast
broadband
Shift to a more connected world: Connecting anything and everything
© 2011 IBM Corporation
IBM Institute for Business Value
The Colombian government has become a major catalyst for bringing
communication infrastructure to the population
Vive Digital Plan: Bring technology in the life of every Colombian
to:
• Reduce poverty
• Generate employment
• Improve International Competitiveness
• Achieve prosperity for all
26
Establish a technological leap by:
• The massification of the Internet
• National Fiber Optic Project aimed to bring fiber
optic to 400 municipalities across the country in 2014
• Expect to expand internet penetration to over 90
percent of Colombian population
• Targeting 8.8 million broadband connections by 2014
• Increase of Internet centers for public access
• Broadband access to public institutions
• Development of the national digital ecosystem
© 2011 IBM Corporation
IBM Institute for Business Value
IBM‟s IBV study identified scenario-specific critical success attributes
and cross-scenario ones
27
Telco 2015 SCENARIOS
Dominant Industry / integration model
Concentrated / Vertical Fragmented / Horizontal
Addressable market
Declining / Stagnant
Expanding
SURVIVAL
CONSOLIDATION
CLASH OF
GIANTS
MARKET
SHAKEOUT
GENERATIVE
BAZAR Cost-effective ultra-fast
broadband strategy
Cost containment
Agile, flexible, reconfigurable
processes & infrastructure
Culture of innovation and
collaboration
Network /customer insights to
optimize experience & cost
Common Critical
Success Attributes
© 2011 IBM Corporation
IBM Institute for Business Value
28
By 2010, 30 billion RFID tags will be embedded into our world and across entire ecosystems
An estimated 2 billion people will be on the Web by 2011 …. and a trillion connected objects – cars, appliances, camera, roadways, pipelines – comprising the “Internet of Things”
Every day, 15 petabytes of new information are being generated. This is 8x more than the information in all U.S. libraries
It is becoming increasingly
INSTRUMENTED
It is becoming more
INTERCONNECTED
Systems are becoming more
INTELLIGENT
Our world is changing and becoming smarter
© 2011 IBM Corporation
IBM Institute for Business Value
29
They have
instantaneous access to
information about
communication
products, services,
provider and other
consumers’ experiences
through technology
They use multiple
technologies to
interact with other
consumers and with
communication
providers
Interconnected
They have clearly
defined expectations
of what they want from
their provider now and
in the future
Intelligent Instrumented
The consumer is becoming smarter
© 2011 IBM Corporation
IBM Institute for Business Value
30
Smarter CSPs can profit from the Big Data from their network and
other customer information to enhance the customer experience
Data
Transformation
Transactional Data
Referential Data
Transactional
Data
Historical
Data
Referential
Data Sets
Historical Data
Data Ingestion
Network/Customer insight to deliver a distinctive customer experience which
goes beyond satisfaction and creates an emotional engagement with their CSP
Deliver Customer
Experience
© 2011 IBM Corporation
IBM Institute for Business Value
31
Industries are becoming smarter, and Communications Service Providers can play a crucial role on enabling smarter industries
Smarter energy and utilities
Smarter government
Smarter healthcare
Smarter transportation
Smarter solutions for retail
Smarter banking Smarter insurance Smarter telecommunications
Smarter chemical and
petroleum
Smarter electronics
© 2011 IBM Corporation
IBM Institute for Business Value
To respond to these challenges and strengthen critical success
attributes, CSPs must think and act differently – become smarter
32
New Business Models
Cloud
Smart Analytics
TELECOM INDUSTRY
Customer experience Adjacent Industries
Smarter energy and
utilities
Smarter governm
ent
Smarter healthca
re
Smarter transporta
tion
Smarter solutions for retail
Smarter banking
Smarter insurance
Smarter telecommun
ications Smarter
chemical and petroleum
Smarter electronics
© 2011 IBM Corporation
IBM Institute for Business Value
Ultimately, the opportunity is for telecommunications to become “the
middleware for the smarter planet”
33
R L
M
C E H
M
I G
F
RETAIL
LOGISTICS
MEDIA &
ENTERTAINMENT
CONSUMER
ELECTRONICS ENERGY & UTILITIES
HEALTHCARE
MANUFACTURING
IT
FINANCIAL
GOVERNMENT
© 2011 IBM Corporation
IBM Institute for Business Value
34
Muchas Gracias
Rob van den Dam
Global Telecom Industry Lead
IBM Institute for Business Value
[email protected] www.ibm.com/iibv